Dow Elef International: Freight Clearing, Freight Forwarding, Shipping and Freight Logistics in Tanzania

Interview with Emmanuel Kazimoto, CEO of Dow Elef International

What are the internal challenges for you to boost your business?

One challenge is the business acceptance. The world now is not controlled: anybody can go anywhere. There is a big influx of foreign companies in the country which we cannot control. Most of the products that have been loaded into our country or into Africa are being supported by foreign countries, especially Chinese companies. When they are sending funds to Africa, they are also sending people. So, there is a big invasion of the Chinese companies and Western companies coming to Africa doing the same job that we are doing. In the construction industry, most of the government money is in Africa, up to 30% of the project. It is becoming difficult now for the local company to win the tender when all the contractors or finance is foreign. Our government has put in place local content policies, but there is not follow up. They are saying certain kinds of machines cannot be obtained locally or certain kinds of technology or skills cannot be obtained. So, we are facing unfair competition. We have been trying to talk to the labor offices in Tanzania to see how this can be fixed. Sometimes, the government is getting loans from the foreign companies, but then, this money is being paid by the taxpayers. The government works slowly. At the end of the day, we are losing money and the employment is still going to the foreign companies. The other challenge is finances. The government and the local banks here simply do not have the financing mood. They do not have enough cash to finance. If you want financing, you have to have an equity of 60% to 70%.

What other challenges do you face outside the business?

The labor force from Tanzania is not as skilled. Sometimes we require the government to allow experts from outside to come, but they want us to hire locally. For the size of my company, I wanted two or three experts to get that kind of skill and that kind of quality. You can input the knowledge, the capability can increase, the interchange of technology will be easier. We need people to be exposed to the new economy, the new technology, the way we are working. In movement of cargo internationally, we want to be a member of the international networks. Maybe we can hire someone from outside, but with the kind of skill that can take the company through investing money. I also have another company called Pioneer Insurance Brokers. I saw how much premium I was paying to another company, and I thought, why should I not make any money on this? Then, I decided to form that company.

What is the scope of your business and your competitive advantages?

As a group, we have 300 years plus experience. Our compliance level is very, very high. We are complying with the government and the other authorities to the maximum. We are a trustworthy company. To our clients, we are offering the best service.

Our business is all about logistics: freight forwarding, shipping, and clearance of goods at custom points such as ports, borders, airports. We then work in transportation in the delivery to the final destination. We are involved in advising the customers on the most appropriate mode of transport and designing the transportation module for the clients. We advise how to ship and in the most cost effective manner. Our geographical location is very good. Dar es Salaam Port in Tanzania is surrounded by eight landlocked countries, including Uganda, Rwanda, Burundi, Congo, Zambia, Malawi, and Zimbabwe. Zanzibar and part of Mozambique also use the port. Another competitive advantage is the reliability of Dar Es Salaam Port. Road infrastructure is very good in Tanzania. Now, the government is building up the roads which is making it easier to transport. The government now is putting in the SGR, standard gauge railway, which will connect us to Congo. Revenue into Zambia is very good. But also, Tanzania is surrounded by the big lakes. Lake Victoria is in Tanzania, Lake Tanganyika, and Lake Nyasa make the connection to these countries very easy for us. Tanzania is good to invest in because of our money policies and peace and security. Tanzania is a very peaceful country. There is no chance that you will ship your goods in Tanzania and they will get lost. The government has put in place a very good security system. Tanzania is not like Mozambique where if you ship the cargo, you are not assured of the security. Here, there is stability of the government policies and the policies in Tanzania will not change. Peace and security and a stable government are very competitive advantages. Also, we have good relationships with other countries. We are very well connected with China, India, Europe. We do not have any kind of sanctions in Tanzania. The same applies to our neighbors and we have a very good relationship with our neighboring countries. Tanzanians are kind people that you can communicate with. It is easier to do business in Tanzania than any place in East Africa or in Africa.

What makes Dow Elef International unique?

We have young management. I can innovate any time. The new technology is there. But also, we have good, experienced people. As a group, we have 300 years plus experience. Our compliance level is very, very high. We are complying with the government and the other authorities to the maximum. We are a trustworthy company. To our clients, we are offering the best service. We are an ISO certified company. We are compliant with safety. Safety is one of the things that we are giving the most priority to in our company. We have competitive prices that we are giving our clients. We are also connected to other networks which has given us the advantage. We are a member of the World Cargo Alliance and the other networks in Tanzania which are giving us more range of giving quality service.

Is technology and digitization playing a big role for you in the logistics industry?

We have invested in technology, including making our own cargo tracking system. We will be integrating it and they have updated it several times because we want to generate a mobile application that will be easier for our clients to use when they are tracking their cargo. We need to compete with other international companies with the technology. We are training all of our employees. In Tanzania before, it was difficult to get people who are using the mobile application or using a computer to clear the cargo.

What impact did COVID have on your business? What were some of strategies that you used to overcome?

We are dealing with international clients and the shipping is coming from abroad. There was a big delay of the shipping of cargo from China as they locked down which affected us a lot as well as the engagement that we had with clients and the other companies. Some of the shipments got delayed in getting clearance due to the fact that some of the documentation was not yet sent from China. In Africa, we are still dependent on hard copies – they needed to see the original bill of lading, original invoices, while the Chinese were locking down, while India, Turkey, Europe and America were locking down. They were sending it digitally and then customs authorities and the government denied it and said they could not release the cargo until they see the hard copies of the original bill of lading. So, that can cause a lot of delays and eventually a lot of the demurrage charges, which we pay extra. COVID hit our business. We reduced the number of the people working and then we locked down for a month and started social distancing. People started working from home, but some of them cannot according to the nature of the business. We needed to make an inspection of the cargo report. The cost of running the company became very high. There are fixed costs. The government did not allow also to reduce the number of employees. So, we still maintain the payment of the same number of employees, but the output was very small.

Has business returned to normal now?

We are getting back to business, but the effects are still there. Our government did not declare a lockdown so the tax authorities did not recognize that there was any problem. The bankers did not recognize the stagnation of the loans, refunds, and finances. They maintained that business was normal. But we are paying extra on loans, we are paying extra taxes to the government. We need to make a profit but at the same time, the government says they did not announce lockdown so we should pay taxes.

What is a success story that you are very proud of?

We have managed to give employment to almost 120 people. For African families, if one person is working, 10 people are depending on him. We have been contributing to the government taxes that, in turn, are going to the social services – to support the health services, education, etc. We also have Corporate Social Responsibility where we use part of our profits to support the social communities, supporting the hospitals, supporting the orphan centers, supporting the government in the construction of schools. We also support the Cancer Institute to help children that are suffering from cancer. We can see a big impact on the government and the community that is surrounding us.

What is your vision for the company in the medium term, three years’ time? What would you like to have achieved?

I want to get the company to the stage that it will be preferred by clients across the region, while taking the issue of customer satisfaction very seriously. I want the company to employ more people and change the lives of the people. I want to increase the tax basis that I am paying and pay more to the government. I want to have a company that will support the government, but also support the community. I want to grow my company to have the coverage of Eastern and Central Africa. We are registered already in Burundi and Zambia. We want to be the DHL of Tanzania and Africa. FedEx in Africa is very expensive. They can remain in Europe and then subcontract what they are doing to Dow Elef. It is better to have allies like Dow Elef working in Africa and this part of the world. I want to build a company to international standards.

What are the short term projects you are working on?

Currently, we are reviewing the policies and looking at how to run the business after COVID. We are looking at what kind of people we need in the future to run the company. We are trying to see the size of the company that we need, what kind of people we need, what kind of capacity planning capital we need, and which kind of market we need to approach. I contacted one of the university professors and the other business management consultants to do that work.

What was your ambition? Why did you decide to create your company?

When I was 10, one of my teachers, Anna, asked me, “What are you going to be?” I thought, “I’m going to be a teacher, I’m going to be a doctor, I’m going to be in pharmaceuticals.” There was one famous business man who died two years ago named Reginald Mengi. He was the owner of IPP Media. I admired him because first of all, he was head of a soda company that made Coca Cola, Fanta, etc. and at that time, I liked sodas because they are sweet. I saw that many trucks were delivering soda and I liked that business model. So, I told my teacher that I wanted to be a business person. When I finished school, I trained with SDV Notco. When I was there, I found that I was working to the maximum trying to deliver, but still people were not recognizing what I was doing. I was paid less than $2 per week there. So, I said that if I set up my own company, I would be the best employer. I started the company in 2003. I asked my friend Frank and my brother in the UK to join me, but they were worried. I sent 250 pounds to my brother and he bought me a laptop. The internet was very new at that time. I started growing, but I knew working myself will not have a big effect. So, I had people from the college come to me for training. From there, the company was licensed to do the customs clearance. I bought two trucks from the UK and then I bought a trailer. I was unable to buy my first mobile phone. I had to borrow one. I come from a very poor family. My mother had twelve children and I am the eighth. My brothers did not go to school because the family was not able to pay the school fees. With my business, I managed to get almost all my young brothers to school. I did not get a Master’s Degree, but I managed to support my younger brother who got a scholarship to a university in the UK. I paid almost $20,000 for him to get his Master’s Degree. Even some of my employees, I paid for them because I needed them. I am sure that I am not here for nothing. I changed the family money completely. My mother is living in a very good house now. My relatives are living in a good house. I have touched the lives of a lot of people.

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